It’s Got Nothing to Do With Cryptocurrency
On December 17, 2017, a single Bitcoin was worth $19,783. That date would represent the high point for the cryptocurrency.
Currently valued at less than $6,500, attention continues to center around Bitcoin and its overall health. Lost, however, in the ongoing fervor is a far more valuable asset.
As the underlying accounting system that supported Bitcoin transactions, blockchain was a powerful tool in helping to legitimize the digital currency. The blockchain, though, was always primed to move beyond its crypto-cash roots.
A New Way to Buy and Sell Property
Fundamentally, the blockchain is a secure, public ledger or database of collected transactions.
The always expanding transaction records, referred to as blocks, build upon each other chronologically. With each new transaction or block, the collection of computers, or nodes, which make up its network verify its authenticity. No central authority confirms the validity of a transaction, but instead, the network as a whole creates a consensus that the record is accurate.
For the real estate industry, a blockchain transaction would be akin to, “I am the seller, this is the buyer, and our witnesses to this agreement are legion.”
The potential impact this could have for real estate considerations is far-reaching.
One of the critical components for the blockchain in real estate is the use of smart contracts. These digital agreements contain a predetermined set of paraments that, once programmed, become an immutable agreement, available for public review on the blockchain with the terms of the contract strictly enforced after its execution.
Smart contracts offer the promise of a faster and far more straightforward transaction process.
Accurate Property History
Beyond eliminating the archaic and time-consuming paper chase that is a bemoaned, but accepted part of real estate deals, blockchain technology would also make records searches for a piece of property easier.
Take for example the industry’s cumbersome and disjointed multiple listing service (MLS). While a useful database for agents and homebuyers, the territorial nature of the business often leaves MLS information inaccurate or out of date.
Through the blockchain, however, property records become far more dynamic. Each property receives an ID or electronic stamp, and regardless of the transaction or associated event with that specific property—purchase, listing, inspection, improvement or repair—the property record would be updated in real time.
Not only does this provide an accurate and verifiable account of the lifespan of the property, but, from an ownership and physical improvement standpoint, it would reduce various levels of fraud that occur within real estate deals.
Efficiency and Cost Reduction
The blockchain is an elegant solution for pursuing and executing real estate deals, but it's also positioned to be a disruptive force with how many people need to be involved in those transactions.
Imagine real estate proceedings where there is no longer a need for a bank, attorney’s office, or title company to be the arbiter of whether a property transaction is valid. Eliminating these intermediaries will reduce both the timeframe of a deal and its associated costs.
Although blockchain technology won’t necessarily remove the need for real estate agents, there could be instances where they too would prove less vital to the process.
Ultimately though, once you commit to a purchase, not having to jump from the lender to the broker to the title company and back again could dramatically reshape the industry.
Blockchain Isn’t the Future, It’s Already Here
The real estate industry is notoriously slow to accept change, particularly when it comes to technological advances. It's a troubling commentary when a property deal goes smoothly, and your first inclination is to believe that something went wrong.
As advances move faster, and technologies such as blockchain are more commonly accepted as a preferred method to do business, the industry will have no choice but to readjust its traditional mindset.
As a whole, blockchain technology represents a positive step forward. Transparency, streamlined processes, and accurate record keeping are vital to the industry’s well-being.
Change has been necessary for some time. With blockchain technology, that change has finally arrived.